Embattled cryptocurrency exchange FTX has filed for bankruptcy in the US, seeking court protection as it looks for a way to return money to users.
Former boss Sam Bankman-Fried has also stepped down as chief executive, the company said.
It is a massive turn of fortunes for the 30-year-old, who had headed the world’s second largest crypto exchange.
In just over a week, his FTX empire has collapsed, shaking confidence in the already troubled crypto market while crypto investors on the platform recount losses.
“I’m really sorry, again, that we ended up here. Hopefully things can find a way to recover,” Mr Bankman-Fried, nicknamed the ‘King of Crypto’, wrote on Twitter on Friday.
1) Hi all:
Today, I filed FTX, FTX US, and Alameda for voluntary Chapter 11 proceedings in the US.
— SBF (@SBF_FTX) November 11, 2022
“I was shocked to see things unravel the way they did.”
Prior to the meltdown, Mr Bankman-Fried had been one of the stars of the crypto scene, drawing comparisons to investment magnate Warren Buffett, with a net worth estimated at more than $15 billion (£12.8 billion) as recently as Monday.
But rumours earlier this week that FTX and other firms owned by Mr Bankman-Fried were on shaky financial ground prompted a mass of customers to try to withdraw funds from FTX, an exchange used to buy and sell digital tokens.
Facing a cash crunch, Mr Bankman-Fried tried to organize a bailout but that failed, leaving FTX scrambling to raise billions of dollars and many customers unable to access their money.
By filing for Chapter 11 bankruptcy, the company can continue operating, while restructuring its debts under court supervision.
FTX said the goal was to “begin an orderly process to review and monetize assets for the benefit of all global stakeholders”.
“The FTX Group has valuable assets that can only be effectively administered in an organised, joint process,” said new chief executive John J Ray III, a lawyer who previously worked at a venture capital firm and has experience with high-profile bankruptcy cases.
In the filing, FTX estimated that it had between $10bn and $50bn in assets and liabilities and more than 100,000 creditors.
The proceeding involves FTX as well as Alameda Research, a trading firm founded by Mr Bankman-Fried, and roughly 130 affiliates, according to the statement FTX shared on Twitter.
Those include FTX’s operations in the US, which Mr Bankman-Fried had said on Thursday were unaffected.
Mr Bankman-Fried said “this doesn’t necessarily have to mean the end for the companies or their ability to provide value and funds to their customers chiefly, and can be consistent with other routes.
“Ultimately I’m optimistic that Mr. Ray and others can help provide whatever is best”.
For now, Thomas Culham, from Kingston, said he has been unable to withdraw the £2,000 he had invested in FTX – a “big blow” as his funds in FTX were “decent chunk” of his investment portfolio
“It’s probably gone,” the 22-year-old said. “Maybe in a few years’ time I might get some sort of recovery – they do have assets [and] they should be able to liquidate them.”